Policy enabling the establishment of an online marketplace: The Austin Materials Marketplace Case

Policy enabling the establishment of an online marketplace: The Austin Materials Marketplace Case

The Challenge

Online business-to-business secondary material marketplaces are often operated by private companies1. These marketplaces aim to capture some of the lost material value at end of life by connecting waste personnel with procurement professionals. However, due to several barriers such as inconsistent material quantity and quality or competitive primary material market prices, the demand for secondary materials is volatile. Consequently, marketplaces often encounter difficulty achieving financial sustainability. In many markets, marketplaces success depends on support from the public sector in the form of policy, grants, and partnerships.

A Solution

To scale circular solutions both the private and public sector must align resource use objectives. This could take the form of adopting green public procurement requirements, landfill taxes, or zero waste to landfill goals. These types of policies create an environment in which businesses can begin to close the loop on resource consumption through economically viable solutions. Further, public-private partnerships offer a solution to not only align objectives but also co-invest in achieving their respective goals.

Case Example

The City of Austin was the first to implement a Zero Waste Plan in 20092, a strategy aiming at improving waste management to “reach the City Council’s goal of Zero Waste by 2040″3. The plan highlighted that the economic loss related to the value of materials send to the landfill was over $40 million per year4. In 2011, the city adopted the Austin Resource Recovery Master Plan with the aim to accelerate the implementation of the Zero Waste Strategic Plan. The goal is to increase waste diversion to 90% by 20405. In its recommendations, the City urged to “expand and improve local and regional reuse, recycling and composting programs” as well as “involve the community through collaboration and partnerships to achieve Zero Waste”6. It is in this context that the Austin materials marketplace was launched in 2013, considered a tool to foster the implementation of the Strategic Plan.

Being considered as an instrument to accelerate the application of the Waste Management Plan, the Austin Materials Marketplace was fully funded by the City of Austin. By contracting the management and operations of the Marketplace to the U.S. Business Council for Sustainable Development, the City recognized that success depended on external subject matter experts.

As of September 2016, the Austin Materials Marketplace moved to a new revenue model. In reaching a sufficient rate of regular users, it is now able to transition to a network-supported model, gradually making it independent from the City of Austin7. Operating costs will now be offset through memberships, advertising and margins on transactions fees, similar to the typical privately-owned marketplaces.

This example illustrates how marketplace platforms can develop in an enabling policy environment and eventually achieve financial sustainability. Most importantly, it shows how marketplaces are recognized as an instrument to implement a government lead initiative in an effort to transition to a greener, more circular economy.